07/09/2013 06:00 EDT | Updated 02/20/2018 14:51 EST

Leon's, The Brick rapped over 'buy now, pay later' ads

The Competition Bureau is accusing furniture and home appliance retailers Leon's and The Brick of engaging in deceptive marketing by enticing customers with "buy now, pay later" promotions and then charging them various administrative fees up front.

The federal agency filed an action with the Ontario Superior Court of Justice Tuesday that asks that the two retail chains stop using the deceptive advertising practices, refund customers who paid the so-called administration or processing fees and pay administrative monetary penalties.

"Canadian consumers must receive clear and accurate information about what must be paid at the time of purchase and what the actual cost of a particular item is if they use a deferred payment option," said competition commissioner John Pecman in a press release.

The bureau, which is in charge of administering and enforcing the federal Competition Act, accuses The Brick Ltd. and Leon's Furniture Ltd. of burying in the fine print details of the fees that customers who opted to defer payment would be charged up front. These charges included things such as processing or administrative fees, delivery fees and taxes and often bumped the final price of a product far beyond the advertised price.

A customer wanting to defer payment on a $1,500 sofa, for example, could end up paying more than $350 at the time of purchase, even though the advertisements clearly state that no payment is required at the time of purchase, the bureau said.

"Including a lengthy fine-print disclaimer is no licence to advertise prices that are simply unavailable to consumers using a deferred payment option," said Lisa Campbell, the deputy commissioner of competition, Fair Business Practices Branch.

The bureau's action applies to all brands operated or franchised by Leon's Furniture and The Brick, including United Furniture Warehouse. Leon's purchased The Brick earlier this year in a friendly takeover.